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European Biotechnology Employed approximately 73,600 people (82,400 including Switzerland) Had 420 new drugs in clinical development or awaiting approval Generated 16.3 billion of revenue Raised 1.3 billion of equity investment in 2003 Formed 100 new companies

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European Biotechnology As in previous years, the UK was the single biggest contributor to this picture. In 2003 the UK sector: Comprised 455 companies Employed approximately 22,400 people Had 224 new drugs in clinical development or awaiting approval – half the European total

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European Biotechnology The industry in the UK: Generated £3.6billion of revenue - a 19% increase over the 2001-2002 period Raised £392 million of equity investment Formed 36 new companies

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Korean Biotechnology Grew from $1.4 billion in 2002 to $1.95 billion in 2004, an average YoY increase of 22.5% The medical sector accounts for about 60% of Koreas biotechnology industry Approximately 600 companies Employ approximately 12,138 people, 54.4% of who are in R&D, and 45.6% in production

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Australian Biotechnology Approximately 370 biotechnology companies and 600 medical device companies 54 biotechnology firms listed on the ASX Approximately 6000 people employed Market capitalisation of Australian biotechnology firms listed on the Australian Stock Exchange (ASX) is A$7.132 billion (US$5.439 billion)

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Indian Biotechnology 265 firms registered in India, over 75% of which were incorporated in the last five years The top five companies were homegrown; Indian firms account for 62% of the biopharma sector and 52% of the industry as a whole Aiming to grow the industry to $5 billion in revenues generated by 1 million employees by 2009

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The Market for Early Stage Research Deals PreclinicalPhase IPhase IIPre-registrationLaunched

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Recent Novartis early stage deals LicenceHeadline valueRights acquired Arakis & Vectura April 2005 $15m each upfront. Up to $172.5m each in milestones plus royalties AD237 which is in Phase II trials as a potential chronic obstructive pulmonary disease treatment Avanir Pharmaceuticals April 2005 $2.5m upfront and eligibility for up to $2.5, research funding per year for 4 years plus milestones and royalties with total value of up to $200m Develop orally active small molecule therapeutics targeting macrophage migration inhibitory factor to treat inflammatory diseases Hybridon (now called Idera Pharmaceuticals) May 2005 $4m licence fee upfront and up to $132m based upon achievement of milestones, plus royalties Develop and commercialise immunomodulatory oligonucleotides that are toll-like receptor 9 agonists

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Recent Novartis early stage deals LicenceHeadline valueRights acquired Anadys Pharmaceuticals June 2005 $20m upfront. Up to $550m in milestones Agreement covers development, manufacture and commercialisation of ANA975 and additional TLR7 oral drugs Arrow Therapeutics June 2005 $25m upfront. Up to $232m, in milestones Development and commercial sale of A6044 which is a small molecule oral benzodiazepine in Phase II trials for the treatment of respiratory syncytial virus infection Astex Therapeutics December 2005 Upfront and deferred equity payments of $25m with up to $520m in fees and equity payments, option payments and milestones Focuses on 2 experimental onocology drugs of the cell cycle inhibitor family, one in pre-clinical and one in Phase I development

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But Bear in Mind Collaboration Can Be a Stepping Stone… AcquirorTargetHeadline valueDeal NovartisAlnylam Pharmaceuticals Initial payments of approx $56.8m Develop RNAi therapeutics for pandemic influenza. Collective payments could be over $700m, not including royalties PfizerVicuron$1.9bnGain access to pipeline of anti-infectives for both hospital-based and community- acquired infections GSKCovixa$300mPartner for vaccine adjuvants and the development of the oncology product Bezzar for the treatment of non-Hodgkins lymphoma AstraZenecaCAT£75m for 20% stake5 year discovery initiation phase for a minimum of 25 discovery programmes

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Merck licensing strategy results in high value alliances Licensed products or patents 44% of total sales 2005 Revenues : $22 billion In addition, through the partnership with Schering-Plough, Merck shares in the profits of ZETIA and VYTORIN sales: $2.4 billion in 2005 Over $9.5 billion, or 44% of Mercks sales, are attributed to alliance products and patents Key products: Fosamx Cozaar/Hyzaar Nexium Varivax Recombivax HB